Property Tax Appeals

Increased property values are generally a good thing for most property owners, except when it comes to property taxes. With increased property values comes increased tax obligations. As the saying goes, death and taxes are the two certainties in life, and property taxes are definitely included in the latter. Local tax assessors annually send out notifications to property owners indicating the increased taxable value and the increased property tax obligations.

It is important to understand common terms and obligations when discussing property taxes. The state equalize value (“SEV”) is 50% of the cash value of a property. Cash value is defined as the usual selling price agreed to in an “arm’s length” transaction, not a forced sale. SEV changes each year based on the value of your property. The taxable value is approximately 50% of the true value of your property at the time of purchase, adjusted annually at the rate of inflation or 5 %, whichever is less. The dollar amount of taxes you pay is based on the taxable value of the home.

The normal increases are capped, in that they cannot be raised above the statutory limits. This leads to predictable and stable increases property owners can anticipate. Uncapping can occur in certain situations and can have a significant effect on property taxes. Such uncapping can occur pursuant to non-exempted changes in ownership or changes in principal residence. Since the state equalized value is set at 50% of the cash value, with the sale of the home, the cash value is more clearly defined. Regarding the principal residence status, parties are entitled to a tax exemption for up to 18 mills from the tax levied by the local school district, if the property is the owner’s principal residence and they have submitted the appropriate affidavit to the local tax assessor. Owners can only have one principal residence though, so if that principal residence changes, the tax consequences will change as well and can significantly increase. Physical changes in the property can also affect a change in taxable value.

The tax assessor doesn’t necessarily have the final word on property taxes. In the event that the assessed value of your property is not in line with the actual change in value, there are options to challenge the assessment. The first step is filing an appeal with your local tax board of review. It is important to understand though, in order to successfully challenge the assessed value, a showing that the assessed value is incorrect or outside the statutory limit. A challenge simply on the grounds that you do not want to pay additional taxes will not be successful. Therefore, it is important to have a general idea of your property value so you are not blindsided by increased property taxes. It is also important to understand if property values in the area are decreasing, as that can also affect your property tax liability as well. Local governments rely on property taxes as a primary revenue source so they are sometimes slow or even unwilling to voluntarily decrease tax liabilities even when local properties are depreciating. A general understanding of not only the property value but also your rights will allow you to better protect yourself.

Our office is well versed and experienced in property tax appeals and can discuss your situation and formulate a plan to appeal your property taxes. Timing to address tax appeals is important, so contact our Milford office at (248) 676-1000 to discuss your situation today. We help clients throughout Southeastern Michigan, including Genesee, Oakland Livingston, Washtenaw, and Wayne Counties, as well as Mid-Michigan in Clare, Gladwin, Ogemaw, and Roscommon Counties. Our experienced attorneys have counseled such clients in Milford, Hartland, Highland, White Lake, Commerce, Walled Lake, Waterford, West Bloomfield, South Lyon, New Hudson, Brighton, Howell, Ann Arbor, Holly, Fenton, Flint, Linden, Clarkston, Houghton Lake, Higgins Lake, Roscommon and many more local communities.